Gale v. First Franklin Loan Services

The Truth in Lending Act 15 U.S.C. § 1641(f)(2) applies a duty to provide notice only upon a servicer-assignee. Servicers, that are not assignees, have no duty to respond to an obligor's written request for information regarding the obligor's obligation under 15 U.S.C. § 1641(f)(2).

Plaintiff Richard S. Gale refinanced his home in 2006. Gale corresponded with his loan servicer, First Franklin Loan Services (“Franklin”), in an attempt to avoid foreclosure and to request Franklin verify the “true owner of [Gale’s] obligation.” Franklin declined to respond to Gale’s correspondence. Gale was unable to keep up with his payments and had defaulted on his loan by 2008. Gale alleged that Franklin had violated the Truth in Lending Act (“TILA”). TILA 15 U.S.C. § 1641(f)(2) requires, “[u]pon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation.” The Ninth Circuit acknowledged legislation was created, after Gale’s claim had accrued, that may have required Franklin to respond to Gale’s correspondence. (See Dodd-Frank Wall Street Reform and Consumer Protection Act). The Court examined the language cited by Gale from TILA in the context of the “overall statutory scheme.” The Court noted that §1641, as a whole, dealt with assignee liability of a servicer. The Court further construed §1641(f)(2) as containing language of limitation as the statute required “the servicer” to correspond with the consumer, not “a” or “any” servicer as in previous subsections. The Ninth Circuit held “the duty to provide notice under §1641(f)(2) applies only to a servicer-assignee.” Franklin was not a servicer-assignee; therefore, the Court found Franklin had no duty to respond to Gale’s letters. The Court noted that Gale’s pro-se State law claims had been “refined on appeal,” and that the district court “did not have the opportunity” to consider these issues. The Court remanded these refined State law claims to district court. AFFIRMED in part, VACATED in part, and REMANDED in part.